Have anyone ever sold their house to someone with a VA loan?
The VA Home Loan program exists so that qualifying veterans can secure a home, but
home sellers are snubbing VA borrowers in some parts of the country, making it difficult for qualified veterans to use their hard-earned home loan benefits.
Some sellers and their agents think they can do much better than a buyer with a VA loan, so they’ll either not offer that type of financing option in the terms for sale or they will pass over that VA offer for a conventional or even an FHA buyer. Lingering misconceptions often keep sellers and agents alike from giving military homebuyers a fair shake. The simple reality is this home loan program presents new opportunities for both and expands the pool of potential purchasers to include a demographic that’s long led the nation in homeownership rates.
As home prices are rising and the housing market is heating up, some homebuyers are again facing bidding wars with competing for offers beyond the asking price. As sellers get choosier, some most certainly decide to exclude VA financing from the types they’ll accept. Sometimes it’s a seller’s concern about paperwork or slow-moving bureaucracy. Other times it’s an agent’s warnings about the VA appraisal process or closing costs. But many times the fears don’t match up with facts on the ground.
Let’s look at a few common culprits:
- VA Turn Times
Most VA loans close in 30 to 45 days. This isn’t what some agents may remember as the old VA loan program, with everything done via the mail.
- VA Appraisals
The VA appraisal process is two-pronged and involves both the valuation and a broad assessment of certain property conditions, known as the Minimum Property Requirements, or MPRs. On average VA appraisals are coming back in just under 10 days nationwide, although the wait may be longer in more remote parts of the country. True, the MPRs can absolutely pose a hurdle if the property is a fixer-upper or is in need of repair. In those cases, it may not make a lot of sense to consider VA financing; the FHA 203k program may be an alternative. This is an area where a listing agent who knows the VA program can make a big difference.
- Borrower Qualifications
The VA’s no-down payment benefit has helped millions of veterans secure home financing since World War II. But that incredible opportunity doesn’t mean lenders just give away these loans. VA borrowers still need to meet credit, debt and income requirements. In fact, no other loan product on the market, including prime loans, has had a lower foreclosure rate over the last five years. Loan pre-approval isn’t a guarantee no matter the loan type, but VA borrowers aren’t as a group a risky proposition.
- VA Closing Costs
The VA does limit what closing costs veterans can pay. But that doesn’t mean sellers are required to cover all closing costs in every VA transaction. Borrowers in competitive markets will undoubtedly hear from a Realtor or a lender that they may need to come to the closing table prepared to cover some expenses. The average VA purchase loan last year was about $215,000, so don’t assume a military borrower won’t be able to put some skin in the game if necessary.
- Good Sense for Sellers
Home sellers hold all the cards when it comes to deciding from whom they’ll entertain purchase offers. They’re under no obligation to open the door for prospective VA borrowers.
With these common theories debunked, why not cast as wide a net as possible? It’s not like sellers are required to accept any offer they receive. The VA program is booming, and that’s in large part because this demographic is hungry for homeownership but often finds it tough to qualify for conventional financing. Other times they simply want to save on a down payment.
Those using a VA loan are more than able to purchase homes, that is how they got the loan in the first place. So there is no real reason to refuse to sell to someone with a VA loan for that reason alone.